The European Central Bank left benchmark interest rates at a five-year high of 3.5 per cent this afternoon as expected, with markets now hoping for a signal on the timing of the next rate rise.
The decision follows the surprise rate increase by the Bank of England to 5.25 per cent on inflation concerns.
ECB President Jean-Claude Trichet holds a news conference at 1.30pm and investors, confident the bank will raise rates some time in the first quarter, are keen for any indication on whether the next move will be in February or March.
If he uses wording saying the ECB would exercise "vigilance" over inflation risks, this would raise expectations of a February move, while sticking with the phrase "monitoring very closely" would suggest no increase until March.
Steady increases in credit costs throughout 2006 have withdrawn much of the slack in monetary policy and mean the ECB now faces less urgency to raise rates, making it more dependent on the flow of economic data than it was last year.
Mr Trichet is expected to stress the continuing risks to inflation, not least from a rise in German sales tax and solid growth in the 13 nations now sharing the euro, following Slovenia's entry into the region last week.
Bolstering the view that the euro zone is enjoying its best year since 2000, German growth hit a six-year peak of 2.5 per cent in 2006, although a drop in French industrial output cast a shadow over the region's second largest economy.
All 72 economists polled by Reuters last week had expected rates to remain on hold after the first Governing Council meeting for the year.
All but nine economists polled saw a rate rise in the first quarter and a narrow majority expected rates to hit at least 4 percent by the end of September.
Euribor interest rate futures today gave about a 36 per cent chance of a quarter percentage point rise in February and a 98 per cent chance of a rate rise by the end of March.
Agencies